Microfinance Harnessing Enterprise to Fight Poverty

This paper presents an overview of microfinance, its evolution and the future trends. It examines the difficulties of implementing the Bangladeshi model of microfinance in Africa, and looks at how people are working to 'fit' microfinance into the African context. The paper further examines successful microfinance experiments across the world. These include case studies on:

• Concern Worldwide - Bangladesh;
• Jamii Bora Trust - Nairobi, Kenya;
• Swayam Krishi Sangham (SKS) - Hyderabad, India;
• ACORD - Ethiopia;
• Trust Bank - Uganda and the Philippines;
• PlaNet Finance supported post-tsunami reconstruction through microfinance in Tamil Nadu, India.

It asserts that village banks are particularly suited to African circumstances and resonate well with African culture. The paper also provides brief snapshot of the innovations that are currently occurring the microfinance industry worldwide. These include:

• Microleasing;
• Warehouse receipts;
• Microinsurance.

It concludes that:

• By helping people to help themselves, microfinance has had a significant effect in promoting enterprise and reducing poverty.
• However, despite its growing reputation, microfinance still operates on far too small a scale; it must be expanded, especially in Africa.
• But policymakers should be wary of simply throwing money at microfinance or of thinking that what works in one place (for example, in Asia) can easily be transplanted somewhere else (like Africa).